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Post Reply: Understanding the Grounds for Losing Leasehold Rights in Kenya

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on May 21, 2025, 10:20 am</div><div id="pl-5946" class="panel-layout">
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<p dir="auto">n Kenya, leasehold property ownership is a common form of tenure, particularly in urban areas where public land is allocated for private development. Unlike freehold ownership, which grants perpetual rights to Kenyan citizens, leasehold involves a fixed-term agreement, typically up to 99 years, where the lessee holds temporary rights to use the land subject to specific conditions. However, these rights are not absolute and can be forfeited under certain circumstances. This article explores the main grounds for losing leasehold rights in Kenya, drawing from legal frameworks, expert opinions, and recent developments as outlined in various sources, including a recent Nation.Africa article.</p>

<h2 dir="auto"><span style="text-decoration: underline;"><strong>Legal Framework Governing Leasehold Rights</strong></span></h2>
<p dir="auto">The Kenyan Constitution of 2010, alongside key legislation such as the Land Act No. 6 of 2012 and the Land Registration Act of 2012, forms the backbone of land ownership regulations in Kenya. Leasehold tenure, as defined under Article 65 of the Constitution, limits non-citizens to holding land for a maximum of 99 years, while citizens may also access freehold tenure. The Land Act further stipulates conditions under which leasehold rights can be revoked, emphasizing the importance of adhering to the terms of the lease agreement. The National Land Commission (NLC) plays a pivotal role in managing public land and overseeing lease compliance.</p>
<p dir="auto">Leasehold agreements typically include covenants—conditions that lessees must fulfill, such as developing the land within a specified period or paying ground rent. Failure to comply with these terms can lead to forfeiture, a legal process where the lessor (often the government or county authority) reclaims the land. Below, we delve into the primary grounds for losing leasehold rights, supported by insights from legal experts and recent cases.</p>

<h2 dir="auto"><strong><span style="text-decoration: underline;">Grounds for Losing Leasehold Rights</span></strong></h2>
<h3 dir="auto">1.Non-Payment of Ground Rent</h3>
<p dir="auto">One of the most straightforward grounds for forfeiture is the failure to pay ground rent, as stipulated in Section 31 of the Land Act. Ground rent is a periodic payment made by the lessee to the lessor for the use of the land. According to the Land Act, consistent non-payment can prompt the lessor to initiate forfeiture proceedings. This is particularly critical for leasehold properties in urban areas, where county governments rely on these payments for municipal services.</p>
<p dir="auto">For instance, a 2021 report by the Institution of Surveyors of Kenya (ISK) highlighted cases where lessees faced notices for unpaid rent, underscoring the importance of timely payments to maintain leasehold rights. Tenants are often given a grace period to settle arrears, but persistent default can lead to legal action, including court-ordered forfeiture.</p>

<h3 dir="auto">2. Breach of Covenant</h3>
<p dir="auto">A breach of covenant refers to the lessee’s failure to adhere to the terms and conditions outlined in the lease agreement. One common covenant is the requirement to develop the leased land within a specified period, typically 48 months from the registration of the lease, as noted in the Land Act. Undeveloped land stifles urban growth, denies residents access to infrastructure, and can lead to issues like urban sprawl or informal settlements, as highlighted in a 2021 ISK publication.</p>
<p dir="auto">For example, in 2021, the Kakamega County Government issued a notice to repossess undeveloped leasehold plots within Kakamega Municipality, sparking controversy among landowners who argued that such actions infringed on their property rights. However, legal experts clarified that development conditions are designed to prevent land hoarding and speculation, ensuring that public land serves its intended purpose of fostering urban development.</p>
<p dir="auto">Other breaches of covenant may include using the land for unauthorized purposes (e.g., commercial use on land designated for residential purposes) or failing to maintain the property as required. Such breaches can trigger forfeiture proceedings, typically initiated through a court process where the lessor must demonstrate the extent of the violation.</p>

<h3 dir="auto">3. Bankruptcy or Insolvency</h3>
<p dir="auto">Section 73 of the Land Act provides that leasehold rights may be forfeited if the lessee is adjudicated bankrupt or, in the case of a company, goes into liquidation. Bankruptcy indicates that the lessee is unable to meet financial obligations, including ground rent or development costs, which may justify the lessor’s right to reclaim the land. This provision protects the public interest by ensuring that leasehold land remains productive and is not tied up in insolvent estates.</p>

<h3 dir="auto">4. Illegal Possession or Criminal Use</h3>
<p dir="auto">The Land Act also allows for forfeiture if the leasehold property is illegally possessed or used for criminal activities. According to the Oxford Dictionary, as cited in the ISK report, property may be forfeited if it is associated with crimes such as drug trafficking or if it is used as an instrument of crime (e.g., a getaway vehicle in a robbery). In such cases, the government can move to revoke the lease to prevent the misuse of public land.</p>

<h3 dir="auto">5. Expiry of the Lease Term</h3>
<p dir="auto">Leasehold tenure is inherently time-bound, with most leases in Kenya set at 99 years, though shorter terms exist depending on local regulations. Upon expiry, the land reverts to the national or county government, as outlined in Section 12(6) of the Land Act. Kenyan citizens who held the lease immediately prior to expiry have a pre-emptive right to renew, but non-citizens do not enjoy this privilege, as noted in a 2021 legal update by Wamae &amp; Allen LLP. This distinction reflects Kenya’s constitutional commitment to reserving long-term land control for its citizens.</p>
<p dir="auto">The expiry of a lease can significantly impact property value, especially if the remaining term is short. For instance, a 2020 Nation.Africa article emphasized that a short lease term can make it difficult to secure a mortgage, as lenders prefer leases that extend beyond the loan period. Lessees are advised to seek extensions well before expiry, though this often involves additional costs.</p>

<h3 dir="auto">6. Historical Land Injustices and Irregular Allocations</h3>
<p dir="auto">During the regime of former President Daniel Arap Moi, informal transfers of leasehold land were common, often bypassing legal requirements such as land surveys or registration. These irregular allocations, sometimes involving public utility land meant for schools or hospitals, have complicated efforts by the NLC to revoke such titles, especially when innocent third parties have since purchased the land. The Land Laws (Amendment) Act of 2016 sought to address historical land injustices, but the NLC has faced challenges in balancing property rights with corrective measures.</p>

<h2 dir="auto"><span style="text-decoration: underline;"><strong>The Forfeiture Process</strong></span></h2>
<p dir="auto">Forfeiture is not an arbitrary process; it is a civil court procedure that ensures due process. According to Section 31 of the Land Act, the lessor must file an originating summons or a plaint, supported by an affidavit detailing the property, the breach, and the remedy sought. The court evaluates the evidence and may grant relief, such as allowing the lessee to rectify the breach (e.g., paying overdue rent) or ordering forfeiture if the violation is irreparable.</p>
<p dir="auto">The ISK report clarifies that forfeiture does not equate to compulsory acquisition, which involves state appropriation of land for public use with compensation. Instead, forfeiture is a contractual remedy for failing to meet lease obligations. However, some landowners perceive it as an overreach, arguing that it conflicts with the constitutional right to property under Article 40 of the Constitution.</p>
<p dir="auto">The forfeiture of leasehold rights has sparked debate, particularly in urban areas where land is a valuable asset. The Kakamega case, for instance, revealed a lack of public understanding about leasehold obligations, with some landowners accusing authorities of land grabbing. Legal experts, however, argue that forfeiture is a necessary tool to ensure that public land serves its intended purpose and is not used for speculation or profiteering.</p>
<p dir="auto">A 2020 Nation.Africa article highlighted the broader implications of leasehold tenure, noting that leasehold properties often have lower purchase prices but come with additional costs like ground rent and service charges. These costs can catch buyers off guard, emphasizing the need for due diligence before acquiring leasehold property.</p>
<p dir="auto">To avoid losing leasehold rights, lessees should:</p>
<strong>1. Sign a Clear Lease Agreement</strong>: As advised by property lawyer Patrick Rugo in a 2020 Nation.Africa article, a detailed lease agreement outlining rent, deposit, and development conditions can prevent disputes and clarify obligations.

<strong>2. Timely Payment of Rent</strong>: Regular payment of ground rent avoids triggering forfeiture proceedings.

<strong>3. Adhere to Development Covenants</strong>: Developing the land within the stipulated period is critical, particularly in urban areas.

<strong>4. Seek Legal Advice</strong>: Consulting a property lawyer or the NLC can help lessees understand their rights and obligations, especially when facing forfeiture notices.

<strong>5. Consider Lease Extensions</strong>: For properties nearing the end of their lease term, applying for an extension can preserve value and usability.
<h2 dir="auto"><span style="text-decoration: underline;"><strong>Conclusion</strong></span></h2>
<p dir="auto">Losing leasehold rights in Kenya is a serious matter governed by clear legal provisions under the Land Act and the Constitution. Non-payment of ground rent, breach of covenant, bankruptcy, illegal use, and lease expiry are the primary grounds for forfeiture, each reflecting the balance between private property rights and the public interest in sustainable land use. As urban development continues to drive demand for leasehold land, lessees must remain vigilant in meeting their obligations to avoid legal repercussions.</p>
<p dir="auto"><em><strong>Experiencing any land disputes? Contact us today at +254 716 808 104 or info@lawguide.co.ke for expert guidance in navigating them</strong></em></p>

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